STAND. COM. REP. NO. 1435-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2056
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Finance, to which was referred S.B. No.
2056, S.D. 1, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO INDIVIDUAL DEVELOPMENT
     ACCOUNT CONTRIBUTION TAX CREDITS,"

begs leave to report as follows:

     The purpose of this bill is to encourage participation in
Individual Development Accounts (IDA), which is a special savings
account program to assist low-income persons accumulate assets,
obtain education, and promote micro-enterprise development, among
other things, by:

     (1)  Establishing a nonrefundable income tax credit of fifty
          percent of the amount contributed by individuals,
          organizations, and businesses to a fiduciary holding an
          IDA;

     (2)  Specifying that the tax credit is available for a five-
          year period, beginning the taxable year after December
          31, 1999, until December 31, 2004;

     (3)  Prohibiting the use of this tax credit for the portion
          of the contribution for which a charitable deduction
          was taken;

     (4)  Requiring the Department of Human Services to certify
          all IDA tax credit claims; and

 
 
                                 STAND. COM. REP. NO. 1435-00
                                 Page 2

 
     (5)  Limiting the aggregate amount of the tax credits to
          $1,000,000.

     The Department of Human Services, the Department of
Taxation, the Office of Hawaiian Affairs, Hawaii State Commission
on the Status of Women, and the American Friends Service
Committee supported this bill.  Hawaii Alliance for Community
Based Economic Development supported this bill with a proposed
amendment.  The Tax Foundation of Hawaii commented on this bill.

     As affirmed by the record of votes of the members of your
Committee on Finance that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2056, S.D. 1, H.D. 1, and recommends that it pass Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Finance,



                                   ______________________________
                                   DWIGHT Y. TAKAMINE, Chair